minneapolis
CNN
—
Despite the looming threat of recession and the cacophony of mass layoff announcements, American businesses still need workers: 11.01 million of them.
The number of available jobs rose unexpectedly in December, surpassing the revised 10.44 million openings in November and beating economists’ expectations of 10.25 million, according to Bureau of Labor Statistics data released Wednesday. December’s 11 million openings are the highest since July.
The largest increases in job offers occurred in accommodation and food services, which increased 409,000; retail trade, up to 134,000; and construction, up to 82,000, according to the BLS report.
The latest Job Vacancy and Job Turnover Survey, or JOLTS, showed that the job market entering red hot in 2022 had ended the year still soft: There were 1.9 jobs available for every person looking for one.
“The labor market continues to defy expert recession predictions,” Christopher Rupkey, chief economist at FwdBonds, said in a statement. “This may well be the first recession in history without material job losses, even with output and consumer spending turning economic growth upside down.”
The JOLTS report for December showed that labor recruitment increased at 6.17 million from 6.03 million in November, according to the report. Layoffs increased to 1.47 million from 1.41 million in November, and the number of people quitting their jobs fell to 4.09 million from 4.1 million.
The Federal Reserve has been looking for a tighter labor market to help support rate-raising efforts to control inflation. While Fed officials have noted that wages do not appear to be driving inflation, they have raised concerns that a tight labor market and the imbalance between supply and demand for workers could cause wages to rise and eventually in turn, higher prices.
Within the job market, a bifurcation is taking place in terms of people’s experiences, said John Leer, chief economist at global decision intelligence firm Morning Consult.
“For people who are working and have jobs, they know they are in demand and they are trying to do whatever they can to get a slightly higher paying job,” including quitting, he said. “But for people who are out of the labor market and are not working or looking for work, they are really disappointed, even though wage growth is as high as it is. They are not tempting them to come back and start working.”
The latest batch of turnover data caps off what was a landmark year for the labor market, said Julia Pollak, chief economist at ZipRecruiter.
Records recorded during 2022 include most complete hires (76.4 million), most terminations (50 million), lowest firings and layoffs (16.8 million), and highest employee-driven turnover (70% , up from 53% before the pandemic), according to Pollak.
Still, there may be more to the December opening number than meets the eye, he added.
The increase is “somewhat disconcerting” and contrasts with Federal Reserve data on business hiring plans and other leading indicators, he said.
“We believe that the current number of job openings, as measured by the Bureau of Labor Statistics, grossly overstates the current strength and tightness of the labor market,” Pollak said in a statement. “Online hiring and job postings have seen a slow renormalization in recent months that is still not being reflected in job postings.”
How much and how quickly the job market cools off may well depend on consumer activity, Leer said.
In recent months, consumers have reduced their spending and reported greater stress on their finances, including spending more money than they were taking in, Leer told CNN Business.
“We’re starting to see companies also feeling the pressure of higher interest rates, tighter financial conditions and potentially weaker consumer demand, leading them to scale back some of their hiring plans,” he said. “So when you put those things together, my view is that it’s increasingly likely that the demand for labor will slow down quite dramatically during the first quarter.”
“In the second quarter, I think that’s when we’re most likely to see a full pullback and a contraction in job growth,” he added.
There are some signs that a slowdown has already begun. As of January 27, job postings on Indeed are down 4% from the previous month, said Nick Bunker, director of economic research for North America at Indeed Hiring Lab.
“Obviously expect more data on that front, but it looks like there is some moderation in demand at least so far. [in 2023]”, he said in an interview with CNN.
A significant portion of that data will come to light on Friday when the BLS releases its jobs report for January.
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